A modern Gulf Crisis, triggered by tensions between Iran and the US, has resulted in disruptions in oil shipments in the Strait of Hormuz, situated between the Persian Gulf and the Gulf of Oman.
These tensions have had far-reaching effects on geopolitics and the global economy as it includes the world's largest oil producer Saudi Arabia. The diplomatic row between the countries has also put other countries in the Middle East in the crossfire of growing confrontation between Iran and Saudi Arabia, which has seen incidents spilling across borders and affecting countries like Yemen, Syria and Lebanon.
The diplomatic elephant in the room
The salvos of words fired by the heads of the two countries at the United Nations (UN) General Assembly are a good indication of where the battle lines have been drawn. The interaction, which seemed like a well-rehearsed dialogue between US President Donald Trump and his Iranian counterpart Hassan Rouhani, started with Trump giving the assembly a history lecture outlining the UN’s 70 years of existence.
“Where I stand the world has heard from presidents and premiers at the height of the cold war. We have seen the foundation of nations. We have seen the ring-leaders of revolution,” Trump started, before quickly reminding those in attendance of the military might of the United States.
Rouhani, on the other hand, made clear that Iran is not in the habit of making friends with countries that have a penchant for imposing sanctions on others.
US President Donal Trump and Iranian President Hassan Rouhani addressed the UN General Assembly. Pic: UN
No diplomatic relations exist between the two countries - these were severed by the events of the 1979 Revolution and subsequent seizure of the US embassy in Tehran on October 4 of the same year.
Declassified CIA cables suggest that there were some interactions between the US and the then-exiled politician and cleric Ayatollah Ruhollah Khomeini before the overthrow of Shah Mohammed Reza Pahlavi. These cables show some US appreciation of the political forces gaining hegemony on the eve of the revolution.
Jimmy Carter might have kicked a hornet’s nest in 1978 when on December 8 he declared that as the US, they would “personally prefer” the Shah to still play a major role.
Ayatollah Ruhollah Khomeini supporters during the December 1978 demonstrations calling for the removal of the Shah and Khomeini's return from exile. Image: Wikimedia Commons
International Court of Justice: Can the court ease Gulf tensions?
The International Court of Justice has given Iran until December 23, 2019, to respond to objections by the United States in the case known as the Alleged Violations of the 1955 Treaty of Amity, Economic Relations, and Consular Rights. The case, which dates back to a judgement handed down on October 3, 2018, found that by reimposing sanctions on Iran, the US had violated the treaty.
Members of the delegation of the Islamic Republic of Iran led by Mohsen Mohebi (R). Image: UN Photo/ICJ-CIJ/Frank van Beek
Iran petitioned the court on July 16, 2018, after the US withdrew from an Iran nuclear deal in May 2018, apparently in protest of Washington reimposing of sanctions that had been relaxed when US, China, France, Germany, Russia, and the United Kingdom signed the Joint Comprehensive Plan of Action in July 2015.
Under the deal Iran stood to gain a windfall of around $100 billion in unfrozen assets, could resume selling oil, and could make use of international financial markets in return for curbing its nuclear programme.
In 2018, nearly half of the $216.83 million recorded in the US Treasury’s Terrorist Assets Report was linked to Iranian government entities.
This amount includes assets belonging to Bank Markazi, or the Central Bank of Iran, which has since had its assets subject to enforcement proceedings in the US.
Members of the delegation of the United States of America led by Richard C. Visek (L). Image: UN Photo/ICJ-CIJ/Frank van Beek
What the diplomatic fallout has meant for the court?
The door to any diplomacy was slammed shut in 1983 after the bombing of the US Marine Corps barracks in Beirut. The US still blames Iran for this incident, much to the Islamic Republic's chagrin.
The tit-for-tat exchange between these two is one of the enduring effects of the US decision in 1984 to designate Iran as a “State Sponsor of Terrorism”.
The US followed this by amending laws such as the Foreign Sovereign Immunities Act (FSIA) in order to remove immunity for countries seen as sponsoring terror. Assets belonging to the Iranian government, which have been blocked as a result, could to be attached to satisfy default judgments against Iran.
U.S. Secretary of State Mike Pompeo announced in 2018 that America was pulling out of a treaty signed in 1955 that had provided a basis for normalizing relations between the two countries, including diplomatic and economic exchanges.
That followed hours after the International National Court of Justice had ordered America to ensure that a new round of American sanctions imposed against Tehran did not prevent food, medicine and aircraft parts from reaching Iran.
Iran has, when it suits its political objectives, used this treaty as an insurance policy against US political meddling. The treaty was signed after the US reinstated the Shah following the 1953 coup that overthrew Iran’s democratically elected prime minister, Mohammad Mosaddegh.
Mosaddegh had drawn the ire of UK’s Winston Churchill and then-US President Dwight Eisenhower when he failed to prevent a parliamentary vote to nationalise the country’s oil industry from passing.
The treaty has retained its usefulness as a geopolitical tool, albeit an ambivalent one, for both Iran and the US. Iran ignored its terms in 1959 and 1960 during the Iran hostage crisis in which 52 American diplomats and citizens were held for 444 days after the US embassy in Tehran was seized by Iranian students.
The US didn’t invoke it either, choosing instead to impose sanctions - a violation of the treaty as well. The US would eventually make a U-turn and invoke the treaty’s clauses that provide for the mutual protection of each country's citizens.
Iran’s turn to invoke the treaty came when the US pulled out of the 2015 Joint Comprehensive Plan of Action as agreed to with the five members of the UN Security Council, Germany and the EU. In addition to relaxing US sanctions against Iran, the plan had also relaxed UN and EU sanctions.
When the US abandoned the Iran nuclear deal and re-imposed sanctions, the legal consequence was that Iran could now take its grievances to the ICJ. When the court found in favour of Iran, the US response was to terminate the treaty. The Amity Treaty no longer exists.
Impact of the crisis on oil
The global oil market is still reeling after brazen Houthi attacks on Saudi oil fields on September 14, 2019, that saw a spike in oil prices driven by growing concerns about the resource output. The drone attacks slashed output from the world's top crude oil exporter by half.
Source: MarketWatch
The end of the ongoing Gulf Crisis is not in sight, and the situation is unlikely to change for the foreseeable future - at least not until tensions between Iran and US cool down.
So far the confrontations between the two countries seem to be gaining an increasingly military character and a diplomatic resolution to the tiff seems unlikely at this point. The row has also put the Middle East at the centre of these escalating military confrontations.
With the Persian Gulf as the main battleground, the confrontations have disrupted operations for oil tankers passing through the Strait of Hormuz.
Iran has relished the strategic upper-hand that the Strait of Hormuz presents, as the most sensitive choke point in global oil logistics and transport. The strait, which lies between the Persian Gulf and the Gulf of Oman, provides the only sea passage available for cargo to pass from the Persian Gulf to the Arabian Sea.
The Persian Gulf is an important transit route for the global oil market.
Iran’s oil output, however, has plummeted dramatically since the US withdrawal from the Iran nuclear deal. US output over the same period, on the other hand, has reached 11 million barrels per day - the highest since 1972. Meanwhile, the US has continued accusing Iran of having a hand in a number of recent incidents that include attacks on oil tankers passing through Hormuz - an allegation Iran vehemently denies.
Iran has since issued its own stern warning for foes itching to move on it. On June 20, 2019, Iran’s Revolutionary Guard Corps shot down a US surveillance drone flying over the Strait of Hormuz, citing violation of Iranian airspace as a reason. Only the last minute decision by the US to pull back on retaliatory airstrikes prevented the situation from escalating further into a full-fledged war.
Both the US and Iran seem to be biding their time, waiting for the signal of a decisive tilt in the balance of forces. The chances of the leaders in Tehran and Washington de-escalating the standoff look slim. This is especially true in light of the increasing number of US troops in the region, and the warnings by Iran that they will take the fight to the backyard of whoever starts it with them.
